The Indiana Gaming Commission has issued a positive report on iGaming

The Indiana Gaming Commission has issued a positive report on iGaming

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  • Three years after Indiana‘s launch of sports betting in September 2019, discussions of iGaming are certain to generate heated debate. 
  • The Indiana Games Commission has compiled a report on the implementation of online casino gaming in the state. 
  • The good news is that the analysis indicates that implementing iGaming in the Hoosier State should be very uncomplicated regardless of the model selected.

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Introducing online gambling to Indiana

Spectrum Gaming Group conducted a 103-page report commissioned by the Indiana Gaming Commission (IGC). The purpose of the study was to assess the viability of online casino gambling, or iGaming, in Indiana. 

The paper has a release date of July 25, 2022, and is now marked as a “hot subject” on the IGC website. According to the report, adding iGaming to the Indiana market should be a “pretty straightforward procedure,” and sports betting, which Hoosiers are already familiar with, should “enable a speedy adoption.” 

This might be excellent news for the State’s coffers, given that iGaming has gained momentum during the global pandemic and the infrastructure required to support this expansion appears to be merely a stepping stone, not the industry’s final destination.

The paper focuses on various crucial aspects and phases of iGaming implementation in Indiana, including taxation, licensing participation and revenue forecasts, and risk assessment and management. Notably, it examines and compares how other governments have established their iGaming legislation and taxation. 

David Rebuck, the veteran director of the New Jersey Division of Gaming Enforcement, was quoted in the memo as stating that iGaming tax rates will be “greater than the retail casino rate,” but that taxes should not be excessively high. The authors of the paper suggest that if the tax rate is too high, operators will seek to relocate enterprises or customers “to a state with a lower tax rate.” Apparently, this form of tax leakage is typical in internet companies, and iGaming is no different.

Revenue and Tax Receipt Forecasts

Examining the relationship between iGaming revenue numbers and tax rates, the paper concludes that the tax rate is not “necessarily determinative of an operator’s performance”; but, it does determine how lucrative the business can be for the state. 

Other criteria, such as the distribution of casinos, levels of competition, and marketing, were also cited as influential, highlighting the complexity of the process of calculating tax rates.

In addition to enhancing the state’s overall tax revenue, adopting iGaming may have a negative influence on the business of traditional brick-and-mortar casinos. 

This will depend greatly on the model of iGaming that the state decides to implement, with the open model permitting all gaming operators to apply for a license, the closed model restricting licensing to only state casinos for online gaming, and the recently popularized hybrid model requiring outside operators to obtain a licensing agreement with Indiana casinos. Indiana’s establishment of sports betting followed a hybrid strategy.

The research argues that considering the six iGaming states, as they are described to in the paper, “Spectrum does not anticipate iGaming to have a detrimental impact on Indiana casino revenues” and provides numerous forecasts for potential iGaming income and tax receipts. Spectrum evaluated potential revenue amounts using three methodologies and examined three tax rate scenarios, calculating tax rates of 20%, 30%, and 45%. 

The findings are broken down by year for the first three years, with a 3-year average of $1.96 billion in iGaming income based on the three approaches. 

This would result in tax revenues of $392,4 million, $588,6 million, or $882,9 million depending on whether the tax rate was 20%, 30%, or 45%. For context, sports betting was legalized in Indiana in September 2019, which is a month over three years ago. Since then, the business has generated over $60 million in tax income.

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About Lou De Aguila

Lou Aguila is a contributor to Golden Casino News. For over a decade, Lou has published news and featured articles for some of the most reputable sports betting and online casino sites in the world, including BetNow.UK, VegasOdds, and BWin. Apart from being a hardcore live casino punter, he also covers sports stories in North American leagues from time to time.